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fraud reports, consumer complaints, lawsuit's and other legal actions taken against this
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INSURANCE CARRIERS TO PUNISH TARRANT COUNTY

Several insurance companies have decided to place Tarrant County homeowners on
notice that steps have been taken to limit their coverage, particularly affecting
"new" policies. After the recent storms in North Texas, many of us wondered how
the insurance companies would fare after what we all perceived as 'considerable losses' by
the major carriers.

This is how they fared: They took a "hit" in the debit column of their
ledger. This we know.

This is how they dealt with it: The major carriers announced a so-called
"freeze", or at least a reduction in the number of new policies. The problem
they have is that by raising rates or rejecting an application, the company risks having a
more-accommodating competitor pick up the new customer instead. So by implementing a
"reluctance to insure", the company can instill in the minds of the customer
that a "possible shortage of willing carriers" may be imminent. Increases in
rates and deductibles will be buffered and so minimize the loss of new customers.

According to Jim Fuquay's article in the Fort Worth Star Telegram a few months ago:

"Farmers Insurance spokesman Mark Toohey said the company's Catastrophe
Mitigation Plan goes into effect Saturday. Under that plan, Farmers will write only enough
homeowners policies in seven Tarrant County ZIP codes to maintain its existing number of
policies".

My opinion is that this is only bad news for Farmers Insurance. (Someone else will
write those policies.)

According to the same article, "State Farm in 1993 moved to freeze the number of
homeowners policies it underwrites in the state as part of an effort to reduce its
exposure to weather related losses in the Lone Star State. Again, this is only bad news
for State Farm Insurance. (Someone else will write those policies.)

"Jim Davis, a spokesman for the Texas Department of Insurance in Austin, said
yesterday that the prospect of a shortage of homeowners coverage "is a big concern to
us."

He said also "industry representatives have already suggested covering hail damage
separately from the state's standard homeowners policy or boosting deductibles for hail
damage. "But that is not something we are recommending at this time."

(Of course)

(Could it be that someone else might write those policies and without
those "boosted deductibles or exclusions")

According to the column, Farmers spokesman Mark Toohey said: "in one other ZIP
code, Farmers said, it will write no new policies, only renewals. (Step aside, Farmers;
someone else will.)

"Together, State Farm and Farmers insure half the Insurance state's homeowners. If
enough other insurers follow their lead, the availability of coverage could dwindle as it
has in other disaster-lashed states such as California and Florida." (Here's the
catch: "If enough other insurers follow their lead".)

In a horse race, if the leaders fall back, there's a new leader.

Texas already has the nation's highest homeowners insurance rates because of its
susceptibility to natural disasters such as hail, hurricanes and tornadoes, but if the
major carriers can convince Tarrant County customers that a "shortage of insurance
carriers willing to insure them exists, the rates go up, the deductibles go up and from
fear comes a willingness of customers to accept the increases gracefully; a sort of 'pay
up and go quietly' attitude by the benevolent giants of the industry.

"Although Farmers' action does not affect policy renewals, industry sources said
it could possibly contribute to a shortage of coverage for Metroplex homeowners, who have
been battered by devastating and expensive hailstorms." (Excuse me! This is not a
utility company monopoly we're dealing with; there is competition. Homeowners will get
battered again if they perceive that a "shortage" is coming!)

The only shortage that's likely to occur is the number of customers willing to shop for
a carrier. (Many of us remember so-called shortages on coffee, citrus, gasoline, sugar,
copper and others, most of which were perpetrated.)

We all understand the losses taken by those major carriers, but that's the price they
pay for being so formidable in this area. We also understand the "freeze" may be
necessary within their own corporate procedures. They could very well use a pause in their
quest for dominance. So be it.

What we don't want to happen is to be bullied into higher rates and deductibles as a
result of hoax, i.e., a perceived "shortage" when none exists. What does exist
is a penalty for being the "big dog".

Many homeowners lost more than the roof on their house or their car as a result of
these storms.

So to State Farm and Farmers I say: "Step aside. Go lay down somewhere and lick
your wounds." Someone else will come forth and take our premiums.

What can occur now is an opportunity for more smaller companies to expand in the area,
willing to insure without a particular desire to dominate this geographic area as those
who came before them.

A spokesman for an independent insurance agency in Fort Worth, said a shortage of
companies willing to write homeowners insurance in Tarrant County could develop early this
year. (We'll be watching.)

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